The Levi Strauss IPO: What You Need To Know

Your everyday jeans manufacturer will list on the New York Stock Exchange this week under the ticker “LEVI.”

Here’s what you should know about Levi Strauss & Co LEVI and its $674.7 million offering.

The Offering

Levi Strauss on Thursday will issue nearly 36.7 million Class A shares between $14 and $16 on the New York Stock Exchange. Following the offering, investors will have access to both Class A and Class B common stock.

Underwriters are represented by Goldman Sachs Group Inc GS and JPMorgan Chase & Co. JPM Securities, according to the company S1 filing.

See Also: IPO Outlook For The Week: Levi's, Fintech, Business Solutions

The Company

Levi Strauss began in 1853 as a wholesale dry goods business. Two decades later, it invented blue jeans, and it eventually expanded in both scope and client base with the Dockers portfolio and low-cost brands for the likes of Walmart Inc WMT.

Last year, 74 percent of revenue came from bottoms, 20 percent from tops and 6 percent from footwear and accessories.

The firm sells its products through big-box, specialty and online retailers, as well as branded franchise locations, outlet stores, shop-in-shop stores and an e-commerce site. By the end of November 2018, it sold in more than 50,000 retail locations, ran 824 stores, and operated 500 shop-in-shops.

These sites support three market divisions spanning 110 countries. Last year, the Americas contributed 55 percent of net revenue, Europe 29 percent, and Asia, which includes Africa and the Middle East, 16 percent. The latter two expanded their contributions from a combined 39 percent in 2015.

The Finances

Over the last seven years, Levi Strauss has reported 2.3-percent compound annual revenue growth. Net revenue expanded from $4.8 billion in 2011 to $5.6 billion last year. Over the same period, net income rose from $135 million to $285 million, representing 11.3-percent compound annual growth.

“When our current management team joined our company starting in 2011, they implemented new revenue and profit growth strategies that remain in place today,” according to the S1 filing. “...We are seeing the positive results of these growth strategies and management’s disciplined approach.”

The Growth Strategy

Levi Strauss catalyzed its growth with intensive marketing, including an ad campaign that claimed one of the top 10 most-watched ads on YouTube in 2017. It also owns the naming rights to the San Francisco 49ers’ Levi’s Stadium, and it collaborates with influencers like Justin Timberlake and brands like Nike Inc NKE’s Air Jordan.

Management also prioritizes geographical and channel diversification.